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Wall Street Caps Wild Month With Rally 10/31 15:32

   Stocks started the month modestly below a record high, only to cascade to 
their worst slump in two years. But after flirting with a correction, or a 10 
percent drop, the U.S. market rebounded and closed at all-time highs on the 
last day of the month.

   NEW YORK (AP) -- For stock investors, there was no shortage of drama in 

   Stocks started the month modestly below a record high, only to cascade to 
their worst slump in two years. But after flirting with a correction, or a 10 
percent drop, the U.S. market rebounded and closed at all-time highs on the 
last day of the month.

   All told, U.S. stocks ended October solidly higher, up 2.3 percent. The Dow 
Jones industrial average capped the rally by rising 195.10 points, or 1.1 
percent, to end at 17,390.52 on Friday. The Standard & Poor's 500 rose 23.40 
points, or 1.2 percent, to 2,018.05 and the Nasdaq composite added 64.60 
points, or 1.4 percent, to 4,630.74.

   Both the Dow and the S&P 500 closed at record highs.

   It's a remarkable turn given the month's volatility, which at times 
approached levels from the 2008 financial crisis. Then again, the month has an 
unfortunate history for unsettling moves, with the stock market crashes of 1929 
and 1987 both happening in October.

   This October, the market's seesaw path was driven by fears that Europe's 
economy was slipping back into a recession, worries about plunging oil prices 
and concerns of possible weakness in the U.S. economy. Oh, and don't forget 
Ebola. Those anxieties sent the market, for the most part, straight down for 
two weeks.

   The nadir came on Oct. 15, when the S&P 500 came with a hair's breadth of 
going into a correction. Investors had suspected such a drop. The last one 
occurred in late 2011, and historically corrections happen every 18 months or 

   But just after the market came close to going into a correction, it bounced 
right back. Strong U.S. corporate earnings were the primary driver of the 
rebound as well as signs that central banks in Japan and Europe were going to 
do all they could to stop their economies from dragging everyone else down with 

   "I don't think it's a surprise that we came close to a correction. We've 
been expecting one for a while. I think the bigger surprise has been how we 
rip-roared all the way back up," said Bob Doll, chief equity strategist at 
Nuveen Asset Management. "When you hit someone over their head with a hammer, 
you don't expect them to get up immediately."

   U.S. companies have been, for the most part, reporting strong quarterly 
results the last two weeks. Corporate profits are up 7.3 percent from a year 
ago, according to FactSet, compared with the 4.5 percent investors had expected 
at the beginning of the month. And any worries about the U.S. economy earlier 
in the month evaporated as the data rolled in, mostly recently Thursday's data 
showing the U.S. economy grew at a 3.5 percent pace last quarter.

   Friday's gains were driven by the Bank of Japan, which surprised investors 
by announcing it would increase its bond and asset purchases by 10 trillion yen 
to 20 trillion yen ($90.7 billion to $181.3 billion) to about 80 trillion yen 
($725 billion) annually. The announcement came after data showed that the 
world's third-largest economy remains in the doldrums, with household spending 
dropping and unemployment ticking up.

   Japan's move comes only two days after the U.S. Federal Reserve brought an 
end to its own bond-buying program. Investors have been hopeful that the 
European Central Bank might also start buying bonds to stimulate that region's 
economy by keeping interest rates low and injecting cash into the financial 
system. That form of stimulus is called quantitative easing, also known among 
investors as "QE."

   "The Japanese central bank has taken the QE baton from the Fed, and equity 
traders couldn't be happier," said David Madden, market analyst at IG.

   Japan's stock market rose 4.8 percent to the highest level since 2007.

   The Japanese currency weakened dramatically following the Bank of Japan's 
announcement. The yen slumped 2.6 percent against the dollar to 112 yen. The 
yen is trading at the lowest level in more than five years. Japanese companies 
typically like a weak Japanese yen because it makes their exported goods 
cheaper abroad.

   European stock markets rose broadly following the Bank of Japan's 
announcement on hopes that the ECB could be tempted to follow Japan's lead in 
stepping up stimulus measures. However, few think anything will be announced at 
the ECB's next policy meeting next Thursday.

   "The willingness of the Bank of Japan to ease further in the fight against 
deflation will encourage those who think the ECB should be doing the same," 
said Julian Jessop, chief global economist at Capital Economics.

   Britain's FTSE 100 rose 1.3 percent. France's CAC 40 jumped 2.2 percent and 
Germany's DAX climbed 2.3 percent.

   In other markets, the price of U.S. benchmark crude oil fell 58 cents to 
$80.54 a barrel in New York as increasing production from OPEC members added to 
already high global supplies of oil.

   Brent crude, used to price oil in international markets, dipped 38 cents to 
$85.86 in London. In other energy futures trading on the NYMEX, wholesale 
gasoline fell 2.6 cents to close at $2.169 a gallon, heating oil fell was flat 
at $2.515 a gallon and natural gas rose 4.6 cents to close at $3.873 per 1,000 
cubic feet.

   Bond prices fell. The yield on the U.S. 10-year Treasury note rose to 2.34 
percent from 2.31 percent Thursday.

   In metals trading, the price of gold fell $27 to $1,171.60 an ounce. Silver 
fell 31 cents to $16.11 an ounce and copper fell 2 cents to $3.05 a pound.


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